August 18, 2009

National Australia Bank Ltd. agreed to buy the mortgage business of Challenger Financial Services Group as Australia’s four-biggest lenders seek an increased share of the home loans market. Melbourne-based National Australia, the nation’s third- biggest lender by market value, will pay A$385 million ($316 million) for the business, and will take over about A$4 billion worth of loans at an unspecified discount to their value to cover defaults, it said in a statement to the stock exchange.

“This acquisition provides additional distribution and capability in Australian mortgages,” National Australia Chief Executive Officer Cameron Clyne said in the statement today. More than three quarters of outstanding loans in Australia were written by National Australia and rivals Commonwealth Bank of Australia, Westpac Banking Corp. and Australia & New Zealand Banking Group Ltd. That share is growing as non-bank lenders, which have to pay more for funds, have exited home lending since the financial crisis began.